The stock market has witnessed a massive sell-off of late on concerns over the Fed’s aggressive interest rate increases to fight multi-decade-high inflation. A potential slowdown in consumer spending, continuing geopolitical tensions, rising energy prices, and intensifying supply disruptions have fostered bearish investor sentiment.
According to JPMorgan Chase CEO Jamie Dimon, the chances of the Fed curbing inflation without instigating a recession stand at 33%. Amid this situation, investors could turn toward dividend-paying stocks to hedge their portfolios against short-term market volatility by ensuring a steady income stream.
So, we think it could be wise to bet on dividend-paying stocks Cardinal Health, Inc. (CAH) and Phillips 66 (PSX), which recently declared a dividend increase and have a Buy rating in our proprietary POWR Ratings system.
Cardinal Health, Inc. (CAH)
CAH in Dublin, Ohio, operates as an integrated healthcare services and products company internationally. It provides customized solutions for hospitals, healthcare systems, pharmacies, ambulatory surgery centers, clinical laboratories, physician offices, and patients in the home. The company operates in two segments, Pharmaceutical and Medical.
On May 10, 2022, CAH announced that its board of directors approved a quarterly dividend of $0.4957 per share, which is an increase of about 1% from its prior dividend. The dividend will be paid on July 15, 2022, to shareholders of record at the close of business on July 1, 2022.
CAH’s revenue increased 14% year-over-year to $44.80 billion for the fiscal third quarter, ended March 31, 2022. Its dividend pay-outs have grown at a 1.8% CAGR over the past five years and 1% over the past three years. While its four-year average dividend yield is 3.74%, its current dividend translates to a 3.55% yield.
For the current quarter, ending June 30, 2022, analysts expect CAH’s EPS to increase 53.2% year-over-year to $1.18. Its annual revenue is expected to be $178.38 billion in its fiscal 2022, representing a 9.8% year-over-year rise. Over the past six months, the stock surged 15.3% in price to close yesterday’s trading session at $55.83.
CAH’s POWR Ratings reflect this promising outlook. The company has an overall rating of B, which translates to Buy in our proprietary ratings system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
The stock has an A grade for Growth and a B grade for Value. Within the Medical - Services industry, CAH is ranked #9 out of 84 stocks. To see the additional POWR Ratings for CAH (Momentum, Stability, Sentiment, and Quality), click here.
Click here to checkout our Healthcare Sector Report for 2022
Phillips 66 (PSX)
PSX in Houston, Tex., operates as an energy manufacturing and logistics company. It operates through four segments: Midstream, Chemicals, Refining, and Marketing and Specialties. The Midstream segment transports crude oil and other feedstocks; the Chemicals segment markets ethylene and other olefin products; the Refining segment refines crude oil and other feedstocks into petroleum products; and the M&S segment purchases for resale and markets refined petroleum products.
On May 11, 2022, PSX’s board of directors declared a quarterly dividend of 97 cents per share on its common stock, representing a 5% increase. The dividend is payable on June 1, 2022, to shareholders of record as of the close of business on May 23, 2022. PSX’s Chairman and CEO Greg Garland said, “This dividend increase, along with the recently announced resumption of our share repurchase program, demonstrates our continuing commitment to shareholder returns.”
For its fiscal first quarter, ended March 31, 2022, PSX’s adjusted pre-tax income came in at $845 million compared to a $527 million loss in the previous-year period. The company’s adjusted earnings came in at $595 million compared to a $509 million loss in the prior-year quarter. Also, its EPS was $1.32 compared to a $1.16 loss in the year-ago period.
PSX’s dividend pay-outs have grown at a 7.5% CAGR over the past five years and 14.1% over the past three years. While its four-year average dividend yield is 4.03%, its current dividend translates to a 4.07% yield.
Analysts expect PSX’s EPS and revenue to increase 350% and 71%, respectively, year-over-year to $3.33 and $39.12 billion, for the current quarter ending June 30, 2022. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past nine months, the stock has gained 43.9% to close yesterday’s trading session at $95.33.
PSX’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. It has an A grade for Momentum and a B grade for Growth.
We also have graded PSX for Value, Stability, Quality, and Sentiment. Click here to access all PSX’s ratings. PSX is ranked #17 out of 98 stocks in the B-rated Energy - Oil & Gas industry.
CAH shares were trading at $55.33 per share on Friday afternoon, down $0.50 (-0.90%). Year-to-date, CAH has gained 8.38%, versus a -18.93% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.
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